Searching for townhome properties to purchase as rentals in Lakeville, MN? Looking for a single family home for your son or daughter to lease with friends in Apple Valley, MN? The Southern Twin Cities in general has some good opportunities to offer. Lakeville, MN and Apple Valley, MN are down year to date 28% for new listings and average sales prices are down 18-21% compared to 2010 for the same period to date. Closed sales in March of 2011 were UP in Lakeville by 7 % and UP in Apple Valley by 31%. I know, housing statistics can get nauseous when spun every which way. (Market Updates for the Twin Cities) But these numbers do indicate there are positive situations if you are considering this arena. All that said I wanted to pass along a couple nuggets of wisdom and a few tips of what not to do….

Use any lease agreement you can find. These agreements are easy to find on the Internet—maybe too easy. If the agreement isn’t thorough, or if it doesn’t include sections that are required by your state law, you could find yourself in trouble.  There are protected rights for both tenants and landlords that should be included and/or referenced.  If you are at it for the first time, the aid of an attorney or otherwise capable professional will be worth the cost.

Not depositing the security deposit in a proper account. The proper place for the money isn’t with the owner. If you carry a real estate license and manage property, the trust account money must be in a separate property management trust account and not in the broker’s general sales trust account.  Otherwise, a separate account held for security deposits, repairs and other expenses will make your life easier.

Not having the tenant sign a move-in and move-out form. This form includes a property condition disclosure. Without it, you have little recourse if a unit is damaged beyond the usual wear and tear.  This one is easy enough:  “Mr. Tenant, that whole in the wall wasn’t noted on the move in agreement.”  On that note, it may be a good idea to clarify what might be a “normal” and acceptable means of hanging something on a wall.

Assume the tenant is a handy man.  True story, I once had a move-out meeting take a bizarre turn when I noticed the whole in the ground where there was once a toilet.  The tenant proclaimed it broke while cleaning it…  A relationship with a “handy man” will prove advantageous when repairs are needed.  Otherwise, establishing what constitutes a tenant’s responsibility as far as wear and tear versus needed repair will go a long ways. 

Trying to incorporate a lease- purchase arrangement into the lease agreement. There’s nothing wrong with doing this, but it’s complicated, and if it’s not done properly, you could invite trouble. For instance, you could have a difficult time evicting the tenant for nonpayment of rent if the court looks at the arrangement as a purchase agreement.

Stats from the National Association of Realtors show new homes sales dipped 12.6% to a seasonally adjusted rate of 284,000 homes. This did follow last month’s unexpected surge in December new home sales which were the highest they had been in 8 months. “Economists” had viewed last month’s gains as a significant step in stabilizing the new-home market, which has faced lows the past five years. This pace is about half the 600,000 units a year pace the economists view as healthy. In a AP story regarding the same report there was mention that bad weather likely hampered some sales, although the industry has been struggling since the housing bubble burst.

New-home sales continue to feel pressure from the glut of foreclosed homes on the market, analysts say. Meanwhile, foreclosures and all-cash deals drove up existing-home sales in January, the National Association of REALTORS® reported this week. Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 2.7 percent to a seasonally adjusted annual rate of 5.36 million in January from a downwardly revised 5.22 million in December, and are 5.3 percent above the 5.09 million level in January 2010. This is the first time in seven months that sales activity was higher than a year earlier.

Selling Homes in the Twin Cities and surrounding areas for more than 10 years, some of the basics don’t change.  A short list of some good tips for First-Time Homebuyers and a refresher for those with some experience. 

1. Be picky, but don’t be unrealistic. There is no perfect home.
2. Do your homework before you start looking. Decide specifically what features you want in a home and which are most important to you.
3. Get your finances in order. Review your credit report and be sure you have enough money to cover your downpayment and your closing costs.
4. Don’t wait to get a loan. Talk to a lender and get prequalified for a mortgage before you start looking.
5. Don’t ask too many people for opinions. It will drive you crazy. Select one or two people to turn to if you feel you need a second opinion.
6. Decide when you could move. When is your lease up? Are you allowed to sublet? How tight is the rental market in your area?
7. Think long-term. Are you looking for a starter house with the idea of moving up in a few years or do you hope to stay in this home longer? This decision may dictate what type of home you’ll buy as well as the type of mortgage terms that suit you best.
8. Don’t let yourself be “house poor”. If you max yourself out to buy the biggest home you can afford, you’ll have no money left for maintenance or decoration or to save money for other financial goals.
9. Don’t be naïve. Insist on a home inspection and, if possible, get a warranty from the seller to cover defects within one year Insist on a home inspection and, if possible, get a warranty from the seller to cover defects within one year
10. Get help. Consider hiring a REALTOR^® as a buyer’s representative. Unlike a listing agent, whose first duty is to the seller, a buyer’s representative is working only for you. And often, buyer’s reps are paid out of the seller’s commission payment.
11. BONUS TIP:  Whether looking for Short Sales in Lakeville, MN or Foreclosed properties in Apple Valley, education is key, so asking questions and relying on an experienced agent  is to your advantage.